ADNOC dishes out two deals with total value of $3.5 billion

UAE’s ADNOC has awarded two contracts to South Korea’s Samsung Engineering with a total value of $3.5 billion, which will allow an ADNOC-owned refinery to process crude oil from the Upper Zakum offshore oil field.

ADNOC said on Monday that the contracts were signed between its subsidiary ADNOC Refining and the Korean company on the occasion of the visit by Moon Jae-in, President of the Republic of Korea, to the United Arab Emirates.

The signing of the two agreements was also witnessed by Dr. Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, and Paik Ungyu, Minister of Trade, Industry and Energy, Republic of Korea. The agreements were signed by Abdulaziz Alhajri, ADNOC’s Downstream Director, and Choi Sung-An, CEO of Samsung Engineering.

The contracts were awarded for a $$3.1 billion project to introduce crude oil processing flexibility and the award of a $473 million project to recover power and water, both at the ADNOC-owned Ruwais oil refinery.

The first of the two new contracts awarded by ADNOC (ADNOC Refining) to Samsung Engineering was an EPC contract for a crude oil processing flexibility project.

Scheduled to be completed by the end of 2022, this project will enable ADNOC’s Ruwais Refinery-West complex to process up to 420,000 bpd of Upper Zakum crude, or similar crude types from the market, allowing ADNOC to extract greater value from its crude resources by liberating Murban crude, which commands a higher price on global oil markets, to be utilized for export sales, the company explained.

Dr. Al Jaber said: “ADNOC has a long and successful history of working with Korean companies as partners in our concession areas, as contractors for our major projects, and as a customer of our crude oil and refined products. The award of two major Engineering, Procurement and Construction (EPC) contracts reinforces the strong business relationship that exists between the UAE and Korea.

“As ADNOC continues to deliver on its 2030 smart growth strategy, a number of new and exciting opportunities exist across our value chain, particularly in the downstream, which offer the potential to deepen and develop the longstanding relationship between ADNOC and its Korean counterparts.”

Paik Ungyu said: “I hope that these contracts will not only enhance bilateral cooperation in the energy industry, but will also contribute to identifying new joint projects.”

The second contract awarded, also by ADNOC Refining to Samsung Engineering, was an EPC contract for a new Waste Heat Recovery Project. This project, scheduled for completion by the end of 2023, will generate an additional 230 MW of electricity for sale and 62,400 m3 water daily by capturing waste heat, which is currently vented into the atmosphere, by upgrading four giant gas turbines with closed-cycle power generation technology.

ADNOC is looking to grow its refining capability and expand its petrochemical production three-fold to 14.4 mpta by 2025. As a result of the planned expansions in its Downstream business, ADNOC said it would create one of the world’s largest integrated refining and petrochemical complexes at Ruwais, located in Abu Dhabi’s Al Dhafra region.

In the upstream, Korea’s GS Energy was awarded a 3% stake in the ADNOC Onshore concession in May 2015, while Korea National Oil Corporation (KNOC) and GS Energy hold a 40% stake in the Al Dhafra Petroleum concession area, where first crude oil production is expected in 2019.

Korean companies are also a customer of ADNOC’s crude oil and refined products, including LPG, base oil, naphtha and fuel oil. Korea imports around 3 million barrels of crude oil per day, positioning it in the top 5 of global crude importing countries.

Earlier this month, ADNOC awarded stakes in two of Abu Dhabi’s offshore concessions to three oil and gas companies, Italy’s Eni, France’s Total, and China’s PetroChina. Also, back in February, Japan’s Inpex was awarded a 10 per cent interest in Abu Dhabi’s offshore Lower Zakum concession.